Kejrinomics, Economics challenged middle class & impending economic doom

My grandfather used to say, we are a knowledge civilisation. We deeply appreciate knowledge (Gyan) and thus the reverence or social status for brahmins before it ran out of fashion under the Islamic/Colonial vilification. We may have vilified brahmins and put all responsibilities of social ills on them, even though 2/3rd of Indian kings have been what we call OBC today, but we continue to worship Saraswati. 

I brought out Brahmin vilification deliberately to bring out an ugly side effect of our reverence for Knowledge, everybody claims to have knowledge on every subject under the sun. Ask any decently literate person on street and pose any theoretical question on any subject, he will have an answer. We simply can't accept our ignorance on any subjects.  

The Point being, If you are an expert at one subject or recognised degree of acceptance, you are assumed to have complete understanding of every subject issue that this great civilisation faces. As a result we have a Shoba De giving views on Philosophy, Some Rabid Mullah talking on Caste system/Hinduism and Kejriwal talking on economics. while the faithful adding points of their own.
In the new age, Brahmins have changed but the ethos remains. Nowdays, Sh Kejriwal is espousing his strange vision of India. No no no.. I am not against his ideas of corruption less society though I absolutely disagree with the methods. Any sane person with a modicum of intelligence would agree that the root cause of corruption is 'Discretion' & clause of 'discretion' rests in hands of bureaucrats & their political bosses. It means more government= more corruption. 

Restrict the government to the areas which they were originally contracted to fulfil i.e. Law and order, security, rule of law and some more, areas of public good like primary education, public transport  which require massive mobilisation of resources along with general good. Now put this understanding to test Sh Kejri's solution to rid of corruption - More bureaucracy. Have you wondered why Kejriwal utterances, no matter how archaic or disastrous they come out to logical minds, get so much of credibility? Yes, you guessed it right, our love for knowledge and equating them with degrees, IIT in this case.

I was one of the first to call him an anarchist and urban maoist. All his talk on fighting corruption is just  a ruse to heighten passion of common people against the state or its arm that protects law and order, maintains order, Police. No doubt police indulges in petty corruption being overworked & underpaid. The goal is not removing corruption but bring down the state and fill it with Maoist lackeys.

I have some questions for the enlightened souls blowing Kejri horn. 

The first important question : Do Kejriwal offer an alternative that is economically, socially and politically viable and achieves targets that appear to be set by the existing rashtryia framework? If we take economic development and prosperity for all citizens - then what are the methods that Maoists/Kejri offer? They can only work with two models - one is the capitalist road to growth and the other a pre-capitalist form (which by classical Marxist theory as well as the experience of the Mao proper - was to accumulate capital to provide the basis for futrure capitalist development). But eitherway, they are theoretically commited (and so far have not provide any alternative) to the capitalist road.

This is a key question which all Kejri sympathisers or Maoists themselves must be asked. Do they or do they not subscribe to eventual capitalist mode of the economic growth? They can claim that such capital will not be private - but it will then mean either state capitalism, or oligarchical trusteeship of such capital. How do Kejri/Prashant/Gopal Rai (avowed Marxists) ensure that such control does not inevitaly lead to growth of virtual private capital? If capitalism is the end target, why go through the regressive semi-feudal-to-fedual-capitalist primitive capital accumulation method - and not go for more direct grassroots capitalism? Where small amounts of capital appropriate for the skills level of the small producer are forwarded by the state?

Second, do the Maoists offer an alternative form of governance and rashtryia structure that helps all citizens achieve objectives of economic prosperity and pursuit of "fulfillment through creativity" (the key hope in Marx that future development of social productive forces will free up the time of an individual so that he can get over the alienation that capitalism produces - the disjunction between the man and his creation)?

The known models put forward from the Marxist repertoire, are that in USSR, PRC, Cuba, East European ex-communist COMECON block, Angola, Benin, parts of Yemen for a time, assorted countries in some regions of Africa, Chile and Nicaragua for a short while, Spain and Portugal briefly, Iraq and Iran very briefly, North Korea, Vietnam, Kamupchea and Laos briefly.

Out of the surviving regimes with still some claims of communism/Marxism - the ones in some degree of control over their respective rashtryia apparatus - China, Cuba, Vietnam, NK - with the exception of NK, all appear to have made various degrees of compromise with overtly private-capitalist forms. Is the answer to such an eventuality going to be a crucial dependence on the establishment of "communism" and its success all over the world? (The ultimate anathema to the Stalinist derivatives including Maoism - the theory put forward by the Trotskytes)

What are the measures that teh Maoists can propose that guarantees the success of "communism" within India without the "global revolution" and without taking the "state capitalist" road?

Why do I ask Kejriwal/AAPtards these question related to economy? That is because his rhetorical driven, publicity seeking open letters on gas pricing sent to Rahul & Narendra Modi. As he is a politician, I won't show displeasure n his publicity biz however, what takes my goat is whether Narendra Modi will go ahead with the UPA government’s decision to raise gas prices to $8 per mmBtu. 

Narendra Modi & even Rahul gandhi, rightly so, have not responded to the idiotic question. None of them are neither gas pricing experts nor business managers/Economists. That matter should be left best for experts to answer. However, as someone who has managed businesses let me state  few facts..

The question whether will NaMo/Rahul accept gas prices from1 April to $8 per mmBtu, is actually irrelevant: the question is not whether this is the right price or the wrong one, but whether this is the right way to price gas at all. You should know that hydrocarbon resources are scarce, and India is not well-endowed with huge untapped hydrocarbon potential. We import 80 percent of our crude oil, and around 40-50 percent of our gas. The oil and gas imports are the main reason why our current account deficit is damaging the rupee and our economy. Now the question..

1. In case you are short of some good and are forced to import it by paying hard earned tax payer $, should you not leave the pricing free to find it's own level?

2. Should you not stop subsidising the good so to wean away populace from excess consumption/wastage & reduce the subsidy bills restricting them to medical/education. Remember Money does not grow on trees. There is always choice to make.. there is no free lunch, someone has to pay.

3. In case you want to reduce the dependence on imports & save precious $, should you not encourage local sourcing, creating of resource? 

4. And pray,tell how will someone feel encouraged to invest/time/effort/money to source/find that precious resource - in this case gas, without promise of profits.

My own thought is that we should free gas prices to find their own level and must simultaneously incentivise fresh exploration and bring in greater competition in gas exploration and supply so that over time gas prices become reasonable. US natural gas policy is a great example. US Prices at the Henry Hub hit $10 in the middle of the last decade, before falling to just over $4 now following high shale gas production driven by private players. By artificially pegging gas and pump prices of oil low in India, we have become more dependent on imported oil and gas.

Anyone who prices gas cheap is thus acting against the national interest. He is making us dependent on the oil sheikhs of the Saudi peninsula. I am sure, Mr Kejriwal, you do not consider yourself a pal of Saudi and Qatari gas interests.

Now coming to gas exploration cost of Reliance raised by Kejriwal. it’s not as if Reliance was handed a well where it could just put a pump and sell the oil coming out. It had to explore, lose money, invest, create the infrastructure, and then get the gas out. It has taken all of nine years so far. it is also costlier to produce gas offshore. 

The profit margin on any commodity cannot be calculated on the marginal cost of a commodity – the cost of raw materials plus some profit margin – but its entire cost, including overheads, financing costs, and marketing costs.Now, let’s come to another point you made the other day. Joker said the cost of producing gas from Reliance’s Krishna-Godavari offshore fields can’t be more than $1-1.5 per mmBtu, and so the price paid to Reliance as the contractor should not be more than 10-20 percent more than that. That is, less than $2. What about the cost of infrastructure that reliance put up to explore, loose money and time?

Moreover jokers, in case reliance makes some profit, government of India takes away 85% of those profits as it's shares that too post taking hefty royalty from Reliance. Imagine the jobs that this venture sustains & profits GOI makes apart from saving $, generating taxes. If we can't incentivise entrepreneurship, risk taking then economy will wither and we are next in line to be next North Korea. We all be pushed into arms of more and more PSU's who not only are inefficient in terms of ROCE but also firmly in grip of bureaucracy/Politico complex and utterly corrupt.

Who is fighting corruption?

A fantastic article by R Jaggi on first post is on same lines.